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The Great Tuition Pander

Obama versus the bursars.

Feb 6, 2012, Vol. 17, No. 20 • By ANDREW FERGUSON
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To the long list of constituencies at whom President Obama is righteously cheesed off​—​millionaires, billionaires, international terrorists, those sorts of people​—​we may now add the bursars of America’s colleges and universities. He devoted a passage of his State of the Union address last week to the problem of unaffordable college tuition. His face took on that no-nonsense, determined look when he spotted the subject rolling up his teleprompter.

Cartoon of Obama handing B.S. diploma to college graduate saddled with loans

“We can’t just keep subsidizing skyrocketing tuition,” he said. “We’ll run out of money. [Wait​—​haven’t we done that already?] .  .  . Colleges and universities have to do their part by working to keep costs down.

“So let me put colleges and universities on notice: [Super-determined now.] If you can’t stop tuition from going up, the funding you get from taxpayers will go down. [There was applause.] Higher education can’t be a luxury​—​it is an economic imperative that every family in America should be able to afford.”

Three days later, the president flew to the University of Michigan, one of the greatest universities that America’s swing states have to offer, to plump his plan. His staff issued a “fact sheet” with details. Mostly he proposes to use the mighty muscle of the federal government to bring the higher educrats to heel.

“Campus-based aid”​—​meaning some kinds of student loans and work-study programs​—​would be allocated to schools based on how well they “provide good value” and “set responsible tuition policy.” A new piñata stuffed with federal money, totaling $1 billion, will be dangled before state legislatures to inspire them to reduce costs. And several new initiatives are intended to give parents and their college-bound children​—​higher education’s customers​—​more information about the various schools they consider. These “College Scorecards” might even include information about each school’s graduates, what kind of jobs they get after graduation, if any, and how much money they make. Most colleges and universities have stubbornly refused to gather this kind of follow-up information, for good reasons (it’s very hard to collect) and bad (it would make most of them look terrible). 

Conservatives and libertarians will object that Obama’s plan is top-down reform, a gross violation of federalism and limited government generally. So it is. But with a few notable exceptions​—​Hillsdale College in Michigan, for instance, which rejects any federal funding on grounds of academic hygiene​—​the institutions of American higher education are dependencies of the federal government, for better or worse. The government guarantees the loans that students use to pay tuition and pumps billions of dollars of research money into schools that use it to pad their accounts. Withdraw federal money from the schools, or even reduce it significantly, and a large number of them would collapse. Even a few mild threats from Washington might be persuasive.

And in truth the threats are very mild. Details of the administration’s plan make it clear that the president isn’t too terribly cheesed off at American higher education after all. For every demand of “transparency” and “accountability,” he offers more of the kind of aid that has helped make it possible for schools to raise tuition in the first place. Beyond the billion-dollar piñata, the president wants to double the number of work-study jobs, keep guaranteed loan rates artificially low, and steadily raise the maximum award for Pell grants and loosen eligibility requirements. Whenever you see phrases like “investment initiatives to incentivize innovation,” you know some bureaucrat is getting ready to throw money.

But this is a campaign year. Put questions of merit to one side. Obama is both correct and clever to identify surging tuition prices as a major concern. He’s correct as president, because the tuition crisis is intimately related to the larger crisis of quality and waste in higher education, which is quickly becoming a national disaster. (Adjusting for inflation, we spend 40 percent more on higher education than we did a decade ago, with no increase in quality.) And Obama is clever as a presidential candidate, because the affordability of college has caused a widespread anxiety that his opponents have left politically unaddressed. 

The anxiety is everywhere and well grounded in reality. Writing in Inside Higher Ed, Hamid Shirvani, a president in the California State University system, calculates that the average tuition at a public four-year university in the United States increased three and half times between 1980 and today, adjusting for inflation. And there’s no end in sight. Two years ago, tuition rose 7.9 percent from the year before. Last year tuition rose another 8.3 percent. Unconstrained by market pressures, private schools have been gouging their customers at a similar pace.

And yet 94 percent of parents expect their children to go to college, according to a Pew Research Center survey last year. At the same time only 22 percent said college was affordable for most people, and 57 percent said “the higher education system in the United States fails to provide students with good value for the money they and their families spend.” With the unemployment rate of college graduates at an all-time high, the failure to provide good value looks even more irresponsible. 

It’s not clear why Republicans have been slow to turn this anxiety to political advantage, aside from the customary cluelessness. A populist crusade against the gluttonous pointy-heads on college campuses is made-to-order. One reason for the hesitation might be demographic. Obama’s proposal plays on an anxiety that is particularly acute in a cohort of voters that Democrats are keen to appeal to: suburban and exurban families who desperately want to send their kids to college but see only difficulty ahead. They don’t make enough money to pay the “sticker price” tuition at selective colleges, and they make too much money to qualify for need-based aid. The president’s jawboning will sound as music through the McMansions of Fairfax County, Virginia, and Henderson, Nevada. 

Republicans find themselves in a different situation. It’s become a commonplace to note that working-class whites are now the most reliable segment of Republican voters. Many of them lack college educations. A college degree may be within reach of their children, though​—​if they get a Pell grant and a federally subsidized student loan. This is the same kind of federal aid that Obama proposes to increase, and which is plausibly deemed one cause of the shameless rise in tuition. A good way to stop the cost spiral, therefore, is to cut financial aid provided by the federal government​—​cuts that will be unavoidable anyway if Republicans hope to reduce federal spending for other reasons. (Pell grants alone totaled nearly $41 billion last year.) Which Republican wants to go first in offending the party’s most reliable voters?

Yet there may be a way out of the Republican pickle​—​and, more important, a way out of the crisis of American higher education. In a recent report from the left-wing Center for American Progress, Clayton Christensen, a professor at Harvard Business School, notes that 10 percent of college students took at least one online course in 2003; 30 percent did so in the fall semester of 2009. And he predicts 50 percent will be taking online courses two years from now. Already several online universities, such as Western Governors University, are offering cheap and reputable degrees.

Christensen isn’t alone in thinking the web will remake colleges and universities. Many institutions will simply fail when their economic illogic is exposed by the competition that online study​—​inexpensive, measurable, flexible, convenient, and efficient in providing what employers want from graduates​—​will inevitably create for them. The trick for policymakers will be to let this market develop. Get out of its way, in other words. This is what Republicans are supposed to be good at.

Andrew Ferguson is a senior editor at The Weekly Standard and the author of Crazy U: One Dad’s Crash Course in Getting His Kid into College.

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